Chap11 - r11 11 a. PUBLICGOODSAND COMMONRESOURCES...

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r 11 Problems and Applications 1. a. (1) Police protection is a natural monopoly, because it is excludable (the police may  ignore some neighborhoods) and not rival in consumption. You could make an argument  that police protection is rival in consumption, if the police are too busy to respond to all  crimes, so that one person's use of the police reduces the amount available for others. In  that case, police protection is a private good. (2) Snow plowing is most likely a common resource. Once a street is plowed, it is not  excludable. But it is rival in consumption, especially right after a big snowfall, because  plowing one street means not plowing another street. (3) Education is a private good (with a positive externality). It is excludable, because  someone who does not pay can be prevented from taking classes. It is rival in  consumption, because the presence of an additional student in a class reduces the  benefits to others. (4) Rural roads are public goods. They are not excludable and they are not rival in  consumption because they are uncongested. (5) City streets are common resources when congested. They are not excludable,  because anyone can drive on them. But they are rival in consumption, because  congestion means that every additional driver slows down the progress of other drivers.  When they are not congested, city streets are public goods, because they are no longer 
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This note was uploaded on 10/13/2010 for the course ECON 200 taught by Professor Levendis during the Fall '07 term at Loyola New Orleans.

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Chap11 - r11 11 a. PUBLICGOODSAND COMMONRESOURCES...

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